[Infowarrior] - Twitter Hacking: Feds Probe Financial Markets Risk

[Richard Forno]

This is a prime opportunity for the CFTC to reign in algos and other HFTs.  If all they do is point the finger at Twitter for not using stronger authentication measures, we are screwed.  The problem isn't Twitter, it's uncontrolled algos and HFTs running amok in the markets under the premise of 'providing liquidity' (but only during 'good times' as we've seen repeatedly).  --rick


Twitter Hacking: Feds Probe Financial Markets Risk

By DONNA HOWELL, INVESTOR'S BUSINESS DAILY

 Posted 04/30/2013 09:59 AM ET

http://news.investors.com/technology/043013-654055-cftc-seeks-twitter-hacking-market-fix.htm

A week after a fake tweet from a hacked Associated Press Twitter account moved the stock market, financial trading overseers are tackling what to do about the money risks from these kinds of cyberattacks.

That AP tweet, for which a group called the Syrian Electronic Army claimed credit, said: "Breaking: Two Explosions in the White House and Barack Obama is injured."

It briefly wiped out $136.5 billion of the S&P 500 index's value, as IBD reported. And there have been  several other high-profile social media account takeovers — including of some BBC and CBS (CBS) Twitter accounts — unsettling at a time when quickly shared news, including fake reports, can influence near-instant automated trading.

With the SEC and FBI already on the case, the CFTC — Commodity Futures Trading Commission — takes up the Twitter issue Tuesday afternoon at a meeting in Washington, D.C. High-frequency trading algorithms that automate buying and selling are being cited in early reports about this situation, and figured in the so-called Flash Crash of May 6, 2010. The CFTC and SEC issued a joint report after that incident, and more trading circuit breakers were put in place.

The market ended up for the day April 23 after the brief downdraft that fake AP tweet spurred. The drop is being called the #HackCrash or #HashCrash (a pun on Twitter searching via the "#" hashtag symbol).

"There are algorithms that mine newsfeeds . They quantify, analyze, calculate and compute things most people would never ever dream. And, they do it quicker than a blink of an eye," CFTC Commissioner Bart Chilton said in a speech at Washington University in St. Louis, Mo. "These speed demons are called high-frequency traders (HFTs) ... today we have no rules or regulation."

That speech was on April 15, the day the Boston Marathon bombings hit and brought terrorism worry back to the fore.

Three days earlier, CFTC Commissioner Scott O'Malia testified before a House committee on issues with high-frequency traders , which he said now comprise 52% of global futures markets and 56% of U.S. equities markets.

"As we learned in the flash crash of May 6, 2010, these markets are linked and we need to develop better oversight tools," O'Malia said in prepared remarks, adding that regulators "know little about the trading behavior of high-frequency trading algorithms."

An "open discussion of market issues resulting from (the) April 23 Twitter attack" is on the agenda of the Commodity Futures Trading Commission for Tuesday afternoon in Washington, D.C., following a status update on an "industry-led customer protection technology effort" and other items.

Meanwhile, recent security industry analyses from Verizon Communications (VZ) and Symantec (SYMC) have noted more cyberespionage and other kinds of attacks as potentially "state affiliated." Here was a related IBD report. And other analysts have eyed that possibility in traffic-flooding denial-of-service attacks on the banking sector, including JPMorgan Chase (JPM) and Citigroup (C).


Read More At Investor's Business Daily: http://news.investors.com/technology/043013-654055-cftc-seeks-twitter-hacking-market-fix.htm#ixzz2S2UVjHaw 
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Just because i'm near the punchbowl doesn't mean I'm also drinking from it.